Chennai (Tamil Nadu): Urgent action should be taken to remove the capping of the Central share of premium subsidy under the Pradhan Mantri Fasal Bima Yojana, Tamil Nadu Chief Minister M K Stalin requested Prime Minister Narendra Modi on Thursday.
The Fasal Bima Yojana is successfully implemented and Tamil Nadu has witnessed a huge growth in terms of area insured and farmers' enrolment due to sincere efforts and best practices adopted by the state, Stalin said in a letter to Modi. However, the state's share of premium subsidies has increased at a compound annual growth rate of 28.07 percent in the last five years.
'This has stymied the very purpose of the scheme as the government of Tamil Nadu is finding it difficult to sustain the continuance of the scheme due to increasing financial liability, that too during this pandemic period.' Initially, the pattern of sharing (2016-17) was 49:49:2 (Central, state, and farmer's share respectively). Now, the Central share has been capped at 25 percent for the irrigated areas and 30 percent for the rain-fed areas which leads to a large increase of state share of premium subsidy by 12 percent.
In money value, the state share of premium subsidy which was only Rs 566 crore in 2016-17 has mounted by 239 percent to Rs.1,918 crore during 2020-21, after the capping of Central share of premium subsidy. 'This has further increased to Rs.2,500 crore during 2021-22 due to exorbitant Actuarial Premium Rates (APR) quoted by the insurance companies impaneled by the government of India,' Stalin said and emphasized that the financial implications on the state were causing a lot of concern.
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PMFBY, launched with the noble intention of mitigating the economic losses of farmers during natural calamities has become a heavy liability to the states over the years, the Tamil Nadu CM said.
The intention of capping the subsidy to bring down the APR has not happened in reality as the insurance companies are continuing to quote exorbitant APR citing reasons like high loss ratio, inadequate financial capacity, and lack of support from reinsurers.
The states are coerced to tweak the existing guidelines and adopt new co-insurance models increasing the risks to the states. Otherwise, the insurance companies refrain from bidding. As the state is already reeling under a severe financial crunch due to the coronavirus pandemic, the onus of bearing a huge state share of premium subsidy under PMFBY is unaffordable.
There was no doubt that the capping of the Central share of the premium subsidy has been a major detrimental factor for the implementation of PMFBY, introduced to ensure social security for farmers, Stalin said. 'I, therefore, request you to take necessary action urgently to remove the capping of Central share of premium subsidy under PMFBY and revert to 49:49:2 ratio premium share for the welfare of the farming community in the state.
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(PTI)
